Pea Pea Pea

Somehow the title ‘PPP’ (Public Private Partnerships) did not work for me. Pee Pee Pee would have the PC thinking this was not in good taste, akin to potty humour. I thought that the Three Peas in a Pod might be appropriate as council and business get into bed together. I suppose there could be a reference to the Three Little Pigs story in some reader’s minds, but not mine.

Public Private Partnerships are gaining more attention as governments search for ways to finance capital projects other than through distasteful tax increases. The Mayor and council of Cochrane have just sold the farm to pay for sidewalks in that northern town. It does not get much more basic than selling City Hall to finance capital works. I suppose there is no problem, other than perception, of having government as a lessee in City Hall. What will be next? Sell the roads to a private company? Oh – that has already been done near Toronto.

We have already seen some PPP in North Bay as we sold the Chief in a partnership deal with a private company. By the end of August we will likely be seeing a similar deal with the Jack Pine ski hill operation. The logic in these two deals is that the Three Peas will save us money. We will pay less by having a partner pay part of the cost of operating the facility. In the case of the boat, we pay what the council thinks is a reasonable subsidy to keep a tourist attraction running for a limited number of years.

Council will also consider having a ski hill in the city as an asset for our citizens who slide down hills on boards. Jack Pine Hill will never compete with mountains for attracting tourists so this is a local leisure centre. Council will put a value on the Hill and subsidize someone to operate the hill. The private partner will hope to make enough money from lift fees and the other Partner’s donation to cover costs and turn a profit which they will keep for the risk taken.

The boat and the hill are both money losers so the only way to keep them running is for one partner to subsidize the other. In this case, the taxpayer will pay the private owner. Council is now looking at more Three Peas. We apparently have a number of trees on city property that could be cut and sold. There is also some aggregate that is deemed surplus and if the city could find a private partner with a dump truck and a back hoe, it may sell this asset. If Bill Vrebosch did not have dibs on part of Trout Lake, the City Fathers would likely consider selling our water too. (The City Mothers do not seem too keen on this selling of the farm so far).

The tree cutting may have some attraction for the Council. If they and their private partner had cut down those surplus trees in Pinewood Park and on Janey, there would have been little or no protest over selling the land. Those three big trees on Campbell Ave could have been turned into sawdust before anyone could protest. A bonus for this Three Peas would be that Hydro could have the Peas cut all those trees to the ground – those trees they have to trim every three or four years at a cost approaching $200,000. That money that would go into a Reserve Fund, not reduce our electricity rates.

Next on the list will be Memorial Gardens, that edifice that loses money every year. Well, depending on how you account for your costs. If you do not consider capital repairs to be part of your costs, it lowers the operating expenses considerably. No depreciation also makes the operation look better. The problem is that a PPP with the Gardens may attract GST, property and income taxes, but those costs would no doubt be factored in when any private partner looked at the offer.

The one thing I remember from Accounting 101 is that partnerships are the worst form of business deals. There are just too many things that can go wrong. If one partner is ‘stronger’ than the other, they may exert more influence on the business. Can you imagine going into partnership with a Council? Consider the difference in operating style between the last and present councils and you can see what I mean. And what happens when one partner wants out of the deal?

This brings to mind the Public Public Partnership we made with the Feds to operate the Department of Defence property up on the hill. Now there was a good example of how a partnership works when one partner holds all the high cards.

Make no mistake, public and private businesses operate in different ways – as they should. Although our council prides itself as operating in a business-like manner, it can not and should not consider itself to be a business. That is not their function. Their decisions have to be based on public good, not on good business practices – witness the sale of the Chief.

Governments are there to provide an environment that attracts and encourages business and enterprise to the betterment of the citizens. Private sector businesses exist to make a profit. Some do it with a higher degree of the public good in mind than others, but the bottom line determines their very existence and future.

The Three Peas may become more popular as we try to find capital funding for education and health facilities. We already do it in defence, the other cornerstone of our society. Do we really need to do it at the municipal level or should we just go after the Fiberals for that share of the gasoline tax they promised?

I can not fathom why council and the bureaucrats want to get into the pulpwood and gravel business. Perhaps it is the same thinking that the Conservation Authority had when they got into the Ski Hill and Interpretive Centre business.